$60K One Bedroom BV Unit with carport - Opportunity for the Bargain Hunter - Sale?

Kristine.. said:
If this really does sell for $60,000, then does that make this a bargain?
Click to expand...
Hardly!!! :rolleyes: Especially if you are looking to buy +CF!!! :D

Don't waste your time reading between the lines on this one, READ WHAT IS IN FRONT OF YOU!!!

This brick veneer unit represents an outstanding opportunity in the market place for the discerning bargain hunter or the buyer that is not afraid to get their hands dirty, and transform what is a plain and ordinary property into an outstanding and attractive item. The property is on its knees in regards to condition and in desperate need of renovation to the bathroom, paint work, floor coverings. Actually it needs a total make over. There is gas heating, vaulted timber lined ceilings, nice yard area and most of all an impressive price range that will be very very realistic. The accommodation includes lounge room, kitchen, central hallway which could potentially double as a study, bathroom, bedroom and laundry. Outside there is a carport, small open plan front garden area and partly enclosed rear garden area. Dont disregard it; it may be worth a look as you never know what you might be able to buy it for.

Gimme a break here!!! :D

It's a bargain hunter's daydream!!! If you want to buy CHEAP and are happy to cough up big to do a complete OVERHAUL go for it. It's a shoebox, in need of lots and lots of tape!!! And the real pearler for me was the bit about THE CENTRAL HALLWAY doubling as a study, bathroom and laundry.....heck yeah, just look at the possibilities.....where else can you find a place that offers you the opportunity to work on your PC whilst sitting on the can and waiting for your clothes to dry all at the same place and within such close proximity!!! :rolleyes:

Yep, I'll be knocking over the punters in my dash to secure this little gem....NOT!!! :p
 
Monopoly said:
It's a bargain hunter's daydream!!! If you want to buy CHEAP and are happy to cough up big to do a complete OVERHAUL go for it. It's a shoebox, in need of lots and lots of tape!!! And the real pearler for me was the bit about THE CENTRAL HALLWAY doubling as a study, bathroom and laundry.....heck yeah, just look at the possibilities.....where else can you find a place that offers you the opportunity to work on your PC whilst sitting on the can and waiting for your clothes to dry all at the same place and within such close proximity!!! :rolleyes:

Yep, I'll be knocking over the punters in my dash to secure this little gem....NOT!!! :p
Click to expand...
I agree, it does need a major injection of cash, & I love your humour, however I believe they meant that the central hallway could double as a study and that the bathroom & laundry were separate.

Not a bargain as far as I am concerned.
 
skater said:
I agree, it does need a major injection of cash, & I love your humour, however I believe they meant that the central hallway could double as a study and that the bathroom & laundry were separate.
Click to expand...
Ahhh yes, you're quite right Skater, I stand corrected. :eek: That'll teach me for gliding over the text and totally missing the comma (point??). :p ;)
 
My favourite line was:

Dont disregard it; it may be worth a look as you never know what you might be able to buy it for.

And you thought agents were supposed to represent vendors ;)

Assuming you could get it for $40k and borrowed $32k, this is one property where the holding costs (rates, strata, insurance) could well exceed the interest payments.

I don't know about this place, but when I've added up costs for similar properties, they're hardly less than for a much bigger IP and could easily approach 40% of rental income :(

Now, if the whole block was for sale, and they were on single title, well that might be a different story :)
 
All true, to a point... We all know (or we should!) how much agents REALLY know about the property they sell. Most are not really qualified to make these statements at all. I agree, I wouldn't want this agent selling my 'little gem', but before we "jump", should we not think a little first?

So, since the agent has said this (the lines you quote), and you believe them, I suppose you're also going to say that you believe when they say something like:

"this property leans a little to the right, but it's just been re-stumped, so you should ignore the fact the windows are a little skewed. It's fine! Just needs a good clean" And a host of other one-liners.

It's really easy to get turned off by bad pictures and some 'less than flattering' comments re properties we see online. I'm not going to check it out and it might well be a money pit, but I can't make that call from the info provided, if you can then you got something worth selling. Seriously!

My comment stands;


Programmer said:
All things not considered, yep, agree, and more interesting than most.
Click to expand...
 
Just for the Exercise ...

OK

Let’s look at some figures:

Assume that the property sells for $60,000

Assume 80% LVR loan at the Standard Variable Rate 7.32%

Funds to Complete:

Purchase Price $60,000
Stamp Duty $1,240
Mortgage Registration $47
Land Transfer Registration $241
Provision for Conveyancing / Legal Fees $550
Provision for Rates Adjustment $550
Provision for Lender’s Valuation fees $275
Provision for Lender’s Legal Fees $500
Provision for Sundries & Disbursements $125

Funds to Complete: $64,028

Loan to 80%LVR $48,000
(Assume 50 square metres)
Buyer’s Contribution $16,028

Nominal Repayments Interest Only Loan $76 per week

OK, so the place needs refurbishment

Carpet $500 (concrete slab construction)
Paint $500
Retiling $500
Week off Work $500

Total refurbishment costs $2,000

Total buyer’s contribution: $18,028

Annual Rent Income $105 per week $5,460

Less Interest $3,636
Agents Letting Fee @ 5.5% $300
Management Fees @ 7.7% $420
Municipal Rates including Garbage Collection $350
Water Rates $250
Body Corporate Insurance & Maintenance $600
Landlord’s Insurance $220


Total expenditure $5,776

Trading (Profit / Loss) - $316

Tax offset @ marginal rate 30% Refund $95
(On the basis of single investment)

Cost to hold $221 per annum


Median Value Shire of Wellington Flats / Units $136,000 (2004) up from $60,000 (2000)

Assume 10% Capital Growth in 12 months due to Growth, Inflation, Capital Improvement

Internal Rate of Return:

Buyer’s funds $18,028 plus $221 holding costs = $18,249

Equity Improvement $6,000

IRR 33%



If the loan is 90%LVR, buyer’s contributions would be

$10,932 (including LMI)
Loan repayments would be $85 per week
Shortfall would be $770 per annum

IRR would be 51%

Opportunity is what you make it! A ‘complete refurb’ in a one bedroom unit is not a big deal.

In fact, this is the type of property which investors 'should' be looking at.

Bomb proof, on a through road with it’s own street frontage, in a town of more than 10,000 population with strong rental demand – what more could you ask for?

Sale has a TAFE campus, strong local industries, RAAF Base etc.

So, it’s not a palace. If this was in Kilsyth it would be worth $135,000, in Sunshine $100,000, with the rate of return not so good.

Going through these exercises is important. If it was all three bedroom family homes on 600msq blocks, well, my portfolio would have choked to death long ago.

Not everybody has oodles of money or oodles of equity. We all have to start somewhere!

Sometimes, starting anywhere is what is important.

Cheers

Kristine
 
Thanks for showing that analysis Kristine. I suppose you may not get 10% capital growth every year, but you might get it on average. Would you arrange a building and pest inspection before you bought? What about body corporate contributions-what payments need to be made for upkeep of common property?


Ajax
 
Can you get 80% LVR for this unit?

I recall looking into buying a unit sometime ago and the bank said that if the units was less than 50sqm the maximum they were willing to lend was 60% LVR. Can you get 80% LVR from other sources?

Didn't read the original add so I'm not sure of the size of this unit that we are talking about.
 
Kristine.. said:
OK

Let’s look at some figures:

Assume that the property sells for $60,000

Assume 80% LVR loan at the Standard Variable Rate 7.32%

Funds to Complete:

Purchase Price $60,000
Stamp Duty $1,240
Mortgage Registration $47
Land Transfer Registration $241
Provision for Conveyancing / Legal Fees $550
Provision for Rates Adjustment $550
Provision for Lender’s Valuation fees $275
Provision for Lender’s Legal Fees $500
Provision for Sundries & Disbursements $125

Funds to Complete: $64,028

Loan to 80%LVR $48,000
(Assume 50 square metres)
Buyer’s Contribution $16,028

Nominal Repayments Interest Only Loan $76 per week

OK, so the place needs refurbishment

Carpet $500 (concrete slab construction)
Paint $500
Retiling $500
Week off Work $500

Total refurbishment costs $2,000

Total buyer’s contribution: $18,028

Annual Rent Income $105 per week $5,460

Less Interest $3,636
Agents Letting Fee @ 5.5% $300
Management Fees @ 7.7% $420
Municipal Rates including Garbage Collection $350
Water Rates $250
Body Corporate Insurance & Maintenance $600
Landlord’s Insurance $220


Total expenditure $5,776

Trading (Profit / Loss) - $316

Tax offset @ marginal rate 30% Refund $95
(On the basis of single investment)

Cost to hold $221 per annum


Median Value Shire of Wellington Flats / Units $136,000 (2004) up from $60,000 (2000)

Assume 10% Capital Growth in 12 months due to Growth, Inflation, Capital Improvement

Internal Rate of Return:

Buyer’s funds $18,028 plus $221 holding costs = $18,249

Equity Improvement $6,000

IRR 33%



If the loan is 90%LVR, buyer’s contributions would be

$10,932 (including LMI)
Loan repayments would be $85 per week
Shortfall would be $770 per annum

IRR would be 51%

Opportunity is what you make it! A ‘complete refurb’ in a one bedroom unit is not a big deal.

In fact, this is the type of property which investors 'should' be looking at.

Bomb proof, on a through road with it’s own street frontage, in a town of more than 10,000 population with strong rental demand – what more could you ask for?

Sale has a TAFE campus, strong local industries, RAAF Base etc.

So, it’s not a palace. If this was in Kilsyth it would be worth $135,000, in Sunshine $100,000, with the rate of return not so good.

Going through these exercises is important. If it was all three bedroom family homes on 600msq blocks, well, my portfolio would have choked to death long ago.

Not everybody has oodles of money or oodles of equity. We all have to start somewhere!

Sometimes, starting anywhere is what is important.

Cheers

Kristine
Click to expand...
Good points Kristine,

And you're absolutely correct, one should never dismiss an opportunity. However.....

Although you have done the basic number crunching, your judgement is (albeit optimistic and admirable) a knee jerk reaction heralded by the potential of making a profit. Your only correct "assumption" was as it turns out the fact that the unit is indeed approx. 50sqm.

Unfortunately, in your meagre "refurb" cost of $2000 which is extremely low IMO, you have overlooked some very important repairs:

1. ALL the windows (each and every one of them) are rotted completely and needs replacing.

2. Severe dampness in walls and ceiling, with parts having totally collapsed.

3. Floors totally rotted.

And that's just for starters!!! :eek:

Estimated repairs $20-30K (on the cheap)!!! :eek:

How do I know all this??? I actually RANG the agent BEFORE I posted my original comment!!! Silly of me really, I should have cleared up that "central hallway doubling as a study, bathroom and bedroom" misunderstanding, but I guess when he STARTED (and believe me he just kept going and going.....) about its "poor and sorry state" I tuned out!!! :eek:

Cheers,

Jo
 
Programmer said:
So, since the agent has said this (the lines you quote), and you believe them, I suppose you're also going to say that you believe when they say something like:

"this property leans a little to the right, but it's just been re-stumped, so you should ignore the fact the windows are a little skewed. It's fine! Just needs a good clean" And a host of other one-liners.

It's really easy to get turned off by bad pictures and some 'less than flattering' comments re properties we see online. I'm not going to check it out and it might well be a money pit, but I can't make that call from the info provided, if you can then you got something worth selling. Seriously!

My comment stands
Click to expand...
PROGRAMMER:

No I don't believe everything I read, or see, that is why I do my research FIRST BEFORE I even so much as allow myself to contemplate the potential $$$ factors!!! As for the selling agent (Chris Morrison) selling my "little gem" although I don't know him personally I spoke to other REA friends (in Sale) who do, and they have confirmed he is (if nothing else) upfront and calls a spade a spade, and in my books, that is the sort of people I prefer to do business with!!!

Cheers,

Jo
 
There are other lines to read between on this ad...

Read between...

Auction

and

Price guide around $60,000

Come on, haven't we all been around long enough to know that $60k probably won't buy this :confused: Bait advertising.

Not to say that one shouldn't try and get it for less, if you really want it that is.
 
Kristine,
I like the way you analysed this deal. I'm going to use this as a template for future business. Sure, I do my own thing with gross yield and cashflow calculations, but they’re not nearly as precise.

Btw, how did you work out Stamp Duty? Moreover, how would I calculate Stamp duty on a property say in the $190k to $220k range. And does it matter if it’s an IP or PPOR I'm purchasing.

George
 
grubar30 said:
Btw, how did you work out Stamp Duty? Moreover, how would I calculate Stamp duty on a property say in the $190k to $220k range. And does it matter if it’s an IP or PPOR I'm purchasing.

George
Click to expand...
George, there are literally hundreds of SD calculators out there, here is just one of many:

http://www.wilsonmcdougall.com.au/calculators/stampduty.html

No it doesn't matter to the OSR if the property you purchase is to be your PPOR or an investment, the rate payable remains unchanged.

Cheers,

Jo
 
Stamp Duty in Queensland

Hi George

Thanks, this type of rough analysis forms the basis of the ‘Funds to Complete’ estimates which I do for customers on a daily basis.

It’s not perfect as obviously there are many variables, but it’s a basic estimate as to how much the buyers will need to contribute and what their periodic payments will be.

If we want to get really fancy I do a very broad ‘Negative Gearing’ spreadsheet, too, similar to this one but as I am not licensed to provide taxation or legal advice I use this as a schematic only. However, working these sums out involves the borrower in a ‘hands on’ exercise and they often get the point a lot quicker than if I just handed over a pre-printed sheet with an anonymous example on it.

Regarding your question about Stamp Duty, the best place to check is the State Revenue Office in your State. These Offices are usually on-line via the www.”State”.gov.au websites.

In Queensland you do have a variety of tiers of Stamp Duty.

For purchase of an Investment property of $200,000,

Stamp Duty $5,600
Mortgage Stamp Duty $ 216
Mortgage Registration $109
Land Transfer Registration $155

For purchase of an Owner Occupied property of $200,000

Stamp Duty $2,000
Mortgage Stamp Duty $0
Mortgage Registration $109
Land Transfer Registration $155


For First Home Buyer’s purchase of an Owner Occupied property of $200,000

Stamp Duty $0
Mortgage Stamp Duty $0
Mortgage Registration $109
Land Transfer Registration $155



Hope this is helpful to you. This information is embedded in my PLAN software (Professional Lenders Association Network of Australia Pty Ltd) of which I am a Member.

Regards

Kristine
 
Monopoly said:
How do I know all this??? I actually RANG the agent BEFORE I posted my original comment!!!
Click to expand...

Thanks for the info Monopoly, just a pity you didn't let us all in on this when you posted that FIRST reply. Must have just slipped your mind. It happens to the best of us.

Cheers,

PS. Oh, forgot to mention - my comment still stands. :D
 
Programmer said:
Thanks for the info Monopoly, just a pity you didn't let us all in on this when you posted that FIRST reply. Must have just slipped your mind. It happens to the best of us.

Cheers,

PS. Oh, forgot to mention - my comment still stands. :D
Click to expand...
Michael,

As I said in my PM to you, I was unaware that you (and/or others) required a detailed account of MY investigations of this property, especially considering the purpose of my initial reply was primarily a tongue-in-cheek "you gotta be kidding me, just the write up alone is a sad state of affairs"!!! :p

Yes things do slip my mind at times Michael, especially on days like yesterday where I was in and out (on call) all day. Excuse me if my mind was a little fuzzy!!! :(

It was only when Kristine presented her (and may I add, extremely well set out) break down of costs, that I realised I should say something. I didn't believe this necessary at first, because to my understanding Kristine works in the RE industry and as such I "assumed" that she had done her homework.

All in all, my apologies if I burst any bubbles, and if I offended anyone (you, Kristine or anyone else) I am truly sorry. :eek:

Cheers,

Jo
 
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